The Role of Insurance in a Financial Plan

The importance of auto, health, homeowners and life insurance is well known. Disability coverage, which replaces lost earnings if you can’t work, tends to be ignored — until you need it. Government studies show that a 20-year-old worker has a 30 percent chance of becoming disabled before reaching full retirement age. Yet only about a third of employees in private industry have long-term disability insurance, according to the Bureau of Labor Statistics, “It could be argued that the disability of a breadwinner is worse than the death of a breadwinner.” says James Hunt, insurance actuary for the Consumer Federation of America; “because the disabled person is still soaking up money. “That’s why it makes sense to purchase individual coverage if you’re self-employed — or not covered sufficiently or at all by your employer.